"I would like to have your thoughts on the following:

"Bearing in mind that I know nothing about the restraints (legal, treaties, etc.) between European countries but also that the present crisis of the euro desperately needs to be fixed quickly, and taking into consideration that between German, French and Italian gold reserves one has close to 8000 tons if not more, what would happen if these three countries decided unilaterally to pool these reserves and declare that the 850 billion euros in currency would be guaranteed by gold at 5000 euros an ounce or some other amount that would guarantee a stability of the currency?

"The gold holdings are approximately the same as those mentioned by the US treasury. Therefore, they could compete effectively as far as credibility with the US dollar and, I would imagine it would have an immediate effect on the value of all assets denominated in euro currency.

"Would it not eliminate instantly all doubts and as well all lengthy negotiations and structures that would take months, if not years, to establish? The question would be: can it be done instantaneously without consultation of popular vote or referendums and would certainly oblige all European countries involved to de facto discipline. I would imagine that such a step could at least be good for 10 or 20 years before they start cheating again. It is of course a very farfetched idea but an amusing dream and, if possible, a very real and rapid solution providing it could be held secret and declared suddenly… Best regards, Your faithful Rubini quack"

David Fuller's view Thank you for this interesting email and your amusing nom de plume.

What you suggest is a 'gold bug's' wet dream. Desperate officials, and they do not come more desperate than those in the Eurozone at this time, will presumably turn over every stone (nugget?) in search of an escape route. Despite earlier sales of gold, Germany, France and Italy combined still have a significant amount of bullion. The problem is that it currently trades at €1263, not €5000. Therefore you are suggesting that they reinstate a gold standard at a much higher level.

'Gold bugs' would obviously love this but I doubt that Germany, France and Italy, should they be on the same yellow brick road, could persuade the USA and other major economies to also agree to a dramatic revaluation of the precious metal and a new gold standard. However, maybe you have some inside information and if Ron Paul is somehow elected as the next US president… I expect gold to reach €5000 at some stage but most of us will be lucky to live that long.

Meanwhile, there may be a possibility that European countries and the IMF sell more of their gold to reduce deficits, as I have mentioned before. However, I am not aware that this being actively discussed at the moment, although it would not surprise me if it happened.